Seadrill Limited (NYSE:SDRL) Q4 2023 Earnings Call Transcript

Kurt Hallead: Now there is one more follow-up, if I may, right, is that the other dynamic here, I would have to imagine, right, is that when an oil company is assessing their future projects and assessing — the guy says, okay, what rigs are available that have the spec that you want et cetera, et cetera. I really have to assume when they go through that budgeting process, they’re not looking in the rearview mirror with respect to potential price of a rig, right? And I have to imagine that they’re looking at different ranges, right, and what they may be willing to accept, right? But I have to imagine that they’re not looking at these projects and saying, I can only do them at $400,000 a day. So again, you have some like — am I completely off base in that process?

And I guess the real answer to that question is are customer, the oil company customers factoring in? I have to imagine they’re factoring in some sort of price increase for rates, so when they assess these projects. Any — do you want to set me straight on any of that?

Simon Johnson: No, no. I think we’re in all agreement with you. What I would say is different technical specifications, the customers’ ability to make active choices there declines as the market gets tighter. And I think you also see less price discrimination between rigs of differing specification in a tight market as well. So care to add anything, Samir?

Samir Ali: I’d say the clients claim that our rig rate makes a huge difference to their project FIDs. But in the reality is no, they don’t, right? I mean, the projects work, it’s just making sure that they can get all of their other equipment put together and through the process. And to Simon’s point, it’s a return on capital for them, right? It is, does this make sense for their capital. But in terms of rates, we’ll get beat over the head that it makes a huge difference, but the reality is it does not really move the needle.

Operator: Ladies and gentlemen, there are no further questions at this time. That concludes today’s call. Thank you all for joining, and you may now disconnect your lines.